Login Get Started
HelpDesk
 Embed  Download
  of  

or
Sign in to continue reading...

Islamic Financial Literacy and Its Determinants: A Field Study on Turkey

Mustafa Kevser
By Mustafa Kevser
3 years ago
Islamic Financial Literacy and Its Determinants: A Field Study on Turkey

Halal, Islamic banking

Sukuk

Banking

Halal Economy

Organisation Tags (3)


Create FREE account or Login to add your comment
Comments (0)


Transcription

  1. JTSR (2021) 28: 91-120 DOI 10.14665/1614-4007-28-1-008 PAPER Islamic Financial Literacy and Its Determinants: A Field Study on Turkey Mustafa Kevser* • Mesut Doğan** Abstract With the increasing interest in Islamic finance and banking in recent years, the issue of Islamic financial literacy has become very important. With the development and increase of Islamic financial products, it is possible to make the right choice and make right decisions about Islamic financial products by mastering Islamic financial literacy. The purpose of the current study is to determine the Islamic financial literacy level of people living in Turkey and to identify the factors affecting their level of Islamic financial literacy. To this end, a questionnaire was administered to 479 people in Turkey. The questionnaire consists of 47 items gathered under four sub-dimensions called “General Islamic Finance”, “Islamic Products”, “Islamic Financial Calculation” and “Islamic Financial Institutions and Activities”. In the current study, t-test, ANOVA and post-hoc tukey test were used. As a result of the analyses, the Islamic financial literacy level of the participants was found to be low. Moreover, the variables such as gender, age, profession, marital status, being a customer of a Islamic bank were found to have effects on the level of Islamic financial literacy. Keywords: Financial literacy, Islamic financial literacy, Islamic banking, Islamic finance, demographic variables. JEL Classification: G21, G53, J10. 1. Introduction Islamic banking system in Turkey has been operating for nearly 35 years since the first Islamic bank was founded in 1985. Changes have been experienced in the Islamic banking system and the system has shown a continuous development since 1985. In its current state, Turkey is rapidly becoming one of the most important centres of Islamic Mustafa Kevser*( ), Mesut Doğan** * Assist. Prof. , Finance, Banking and Insurance Department, Bandırma Onyedi Eylül University, Balıkesir, Turkey ORCID ID: 0000-0003-0586-1662 E-mail: mustafakevser83@gmail.com ** Associate Prof., Department of Business Adminastration , Afyon Kocatepe University, Afyonkarahisar, Turkey E-mail: mesutdogan07@gmail.com ORCID ID: 0000-0001-6879-1361
  2. 92 Mustafa Kevser • Mesut Doğan finance and banking in the world. Currently, six Islamic banks operate in Turkey. Three of these banks continue their financial activities as public banks. The other three Islamic banks are foreign capital banks. The fact that Islamic banks operate in the banking sector, compete with conventional banks and offer new products and alternatives is important for all Muslim and non-Muslim customers. Kontot et al. (2016) stated that after many shocks in the conventional banking system in recent years, Islamic banking and finance has attracted global attention. To date, many academic studies have been conducted on the financial performance of Islamic banks, their situation in the face of financial crises, and their risk and management approaches. However, there is limited research on Islamic financial literacy. Financial literacy is facing increasing interest from many groups such as governments, investors, bankers, capital markets and academics, especially in developing countries (Ganesan et al., 2020). Development of new financial products, complex structure of financial markets, political changes, demographic and economic factors are effective in increasing interest in financial literacy (Al-Tamimi and Kalli, 2009: 500). In addition, the effect of changes and developments in information technologies on economic and financial systems in the world makes financial literacy more important. While Miller et al. (2009) draws attention to the importance of financial literacy, they point to the effect of many factors such as evaluation of financial services and products that are becoming increasingly complex, the processes of making decisions for these products, methods of dealing with financial difficulties, improving financial behaviour and increasing the quality of financial services. Today, the inadequacy of financial knowledge and skills of young population faced with complex financial structures, products and services increases the concerns of both families and authorities about financial literacy. Ganesan et al. (2020) state that low level of financial information will create major problems for countries. In their study conducted among university students in Malaysia, Sabir et al. (2008) found that students tend to spend for non-academic purposes, and their tendency to save after receiving scholarships or student loans is extremely low. Similarly, İbrahim et al. (2009) attributed the poor money management skills of university students to low financial literacy in Malaysia. Er and Mutlu (2017) developed a questionnaire based on the OECD financial literacy index and administered this questionnaire to 388 people. The questionnaire consists of 4 sections. These sections are Islamic financial literacy knowledge index, attitude index, behaviour index and general index. In the study, the Islamic financial literacy index was calculated to be 58% and it was commented that this value was low and thus Islamic financial literacy should be developed. Since 2015, three Islamic state banks have been established in Turkey. Increasing the number of Islamic banks and their share in the banking sector is supported by the state. Thus, the developing Islamic banking in Turkey makes it necessary to investigate the state of financial literacy in Turkey. Since the products of Islamic banking are structurally different from those of conventional banks and they are distinguished from conventional banks in terms of fundraising and funding methods, society can make correct financial decisions only if they have Islamic financial literacy. As the financial
  3. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 93 literacy levels of individuals affect their financial perceptions, attitudes and behaviours (Ganesan, 2020; Ahmad, 2020; Eliza & Susanti; 2020), Islamic financial literacy levels are also effective in the preference of the Islamic financial system (Çömlekçi, 2017; Zaman et al., 2017). The purpose of the current study is to determine the level of Islamic financial literacy in Turkey and the determinants of Islamic financial literacy. In this framework, a questionnaire was administered to 476 people in Turkey. As a result of the study, it was determined that the Islamic financial literacy levels of the participants are low. In addition, it was concluded that demographic variables and the status of being an Islamic bank customer affect the level of Islamic financial literacy. The results obtained from this study are important for Turkey. In Turkey, Islamic finance and banking are in the stage of development and also supported by the state. Accordingly, achieving the expected benefit from Islamic finance and Islamic banking will be possible with the development of Islamic financial literacy. In this respect, it is important for policy makers to implement policies that will ensure the development of Islamic financial literacy. The current study consists of five sections. After the introduction that constitutes the first section, the second section includes the literature review. In the third section, the methodology of the study is presented and in the fourth section of the study, the findings of the study are discussed and in the last section, discussion and results are presented. 2. Literature Review The concept of financial literacy is associated with many concepts, including financial knowledge, financial ability, financial education and financial competence. Although Zait and Bertea (2015) state that these concepts can be used interchangeably, there are also studies revealing that each concept has a different meaning. For example, Huston (2010) considers financial education as a human resource investment in financial knowledge and practices. Atkinson and Messy (2012: 14) define financial literacy as “the sum of awareness, knowledge, skills, attitudes and behaviours needed to make healthy financial decisions and ultimately achieve financial prosperity”. The definition of financial literacy by the Organization for Economic Development and Cooperation (OECD) is as follows: “the process of increasing financial welfare by ensuring that financial consumers are informed about financial products and concepts or have enough awareness to make choices between financial risks and alternatives.” As a result of the increasing importance of financial literacy, the International Network on Financial Education (INFE) has been established within the OECD to determine the financial literacy levels of people living in various countries of the world. INFE aims to measure people’s attitudes towards basic issues related to budgeting, fund management, short and long-term financial decisions and financial product selection with the questionnaire developed to determine financial literacy levels. The financial knowledge score was developed with the questionnaire developed by INFE and applied to 14 different countries. As a result of the comprehensive survey, it was determined that the participants could not get high financial literacy scores.
  4. 94 Mustafa Kevser • Mesut Doğan Remund (2010) stated that financial literacy definitions include 5 dimensions: i. Financial concept knowledge, ii. Competence to comment on financial concepts, iii. Ability to manage personal finance, iv. Ability to make appropriate financial decisions, v. Ability to effectively plan future financial needs. With the dimensions he described, Remund (2010) has revealed the key concepts of various financial literacy studies. Rahim et al. (2016) defined Islamic financial literacy as “the ability to use financial knowledge, ability and attitude while managing financial resources according to Islamic techniques” with a definition similar to that of financial literacy. It is seen that recent national and international research on financial literacy has addressed different aspects of financial literacy. Some of these studies are focused on investors (Al-Tamimi and Kalli, 2009; van Rooij et al., 2011; Almenberg and Dreber, 2015; Krische, 2019), some of them are focused on demographic features (Hogart, 2002; Lusardi and Mitchell, 2011; Ansong and Gyensare, 2012, Doğan; 2019), some of them are focused on students (Chen and Volpe, 2002; Beal and Delpachtira, 2003; louw et al., 2013; Kılıç et al., 2015; Biçer and Altan, 2016). 2.1 Dimension of Islamic Financial Literacy The basis of Islamic finance is its strict adherence to Islamic law (Sharia) and the prohibition of interest on financial transactions (Salman and Ausaf, 2004; Khan and Bhatti, 2008). According to Chapra (1985), Islamic finance is a value-based and assetbased system and should strive to achieve Islamic goals such as social equality, poverty reduction and human well-being. In this context, Islamic financial literacy can be defined as understanding and applying finance on the basis of Islamic law (Abdul Hamid and Mohd. Nordin; 2001). Houston (2010) distinguished the concepts of financial knowledge and financial literacy from each other and defined Islamic financial literacy as “the knowledge gained through the use of Islamic financial products and concepts”. One of the main problems faced by Islamic finance is the shortage of sufficient human resources to develop Islamic financial products and services (Abdullah and Anderson, 2015). In recent years, there has been an increase in studies aiming to determine the financial literacy levels of university students. University students represent the demographically young part of the countries and their human resources. In this respect, the financial literacy level of university students is important for making the right financial decisions. However, it is seen that conclusions have been reached in studies showing that both financial literacy and Islamic financial literacy levels are low among university students (Sabir et al., 2008; İbrahim et al., 2009; Rahim et al., 2016; Durmuş and Yardımcıoğulları, 2018). For example, Durmuş and Yardımcıoğlu (2018) researched the financial literacy and Islamic financial literacy levels of the students of the Faculty of Theology using the survey method. In the study conducted on 269 students at Sakarya University, it was concluded that the students of theology were not literate of Islamic finance. The use of different criteria by researchers in the measurement of Islamic financial literacy is another aspect of the issue (Hidajat and Hamdani; 2017). It is seen that the questionnaire method is
  5. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 95 widely used to calculate Islamic financial literacy scores or to determine the Islamic financial literacy levels of individuals (Abdullah and Anderson, 2015; Antara et al., 2016; Zaman et al., 2017; Er and Mutlu, 2017; Sapir and Ahmad, 2020). In addition, the factors affecting Islamic financial literacy should be investigated for the development of Islamic finance (Eliza and Susanti, 2020). In this context, demographic differences (Abdullah and Razak; 2015; Çömlekçi, 2017; Abdullah et al., 2017; Albaity and Rahman, 2019; Eser and Yiğiter; 2020;Daradkah et al., 2020), attitudes, knowledge and behaviours (Zaman et al., 2017; Bekereci, 2018; Ganesan, 2020), religious beliefs and education (Rahim et al., 2016; Zaman et al., 2017; Suci and Hardi, 2020; Ahmad et al., 2020) have been reported to be the factors affecting the level of Islamic financial literacy. For example, in the study conducted by Çömlekçi (2017) to determine the Islamic financial literacy levels of Islamic bank customers, it was found that the level of Islamic financial knowledge and Islamic financial literacy is low. In the study, it was concluded that demographic variables such as gender, age, education level, occupational group and income status are effective on Islamic financial knowledge and Islamic financial literacy level. Abdullah et al. (2017) concluded that gender has a significant correlation with Islamic financial literacy and Albaity and Rahman (2019) found that the level of Islamic financial literacy changes as a function of gender, income status and work experience. Eser and Yiğiter (2020) found that male Islamic bank customers’ level of financial literacy is higher than that of female customers. Daradkah et al. (2020) concluded in their study conducted in Jordan that demographic variables such as education level, region of residence and study area have a significant correlation with the level of Islamic financial literacy. Sapir and Ahmad (2020) revealed that financial education and practices affect the financial literacy score. In addition, it was concluded in the study that social environment and interaction increase the level of financial literacy. The research results of Suci and Hardi (2020) support the results of Sapir and Ahmad (2020). Suci and Hardi (2020) provided financial consultancy to Muslim and non-Muslim firms, and then concluded that the financial literacy level of both groups increased. In light of all the studies and findings mentioned above, we have developed our first hypothesis. H1: Demographic variables are effective on Islamic financial literacy. Having knowledge about Islamic financial products and services is closely associated with the level of Islamic financial literacy and the tendency to use Islamic products (Abdullah and Anderson, 2015; Antara, 2016; Zaman, 2017; Ahmad et al., 2020). Although Islamic finance is developing in the world, the centre of Islamic banking and finance is Muslim countries today. Today, almost the whole sukuk market, which has an important place in the Islamic finance market, is dominated by the Muslim countries such as the Gulf Cooperation countries, Malaysia, Indonesia, Turkey and Pakistan (https://www.fitchratings.com/research/islamic-finance/sukuk-issuance-rose-in-2019-asdiversification-continues-11-02-2020). In this respect, a greater awareness is expected from Muslim countries about Islamic financial literacy and they are thought to have
  6. 96 Mustafa Kevser • Mesut Doğan more information about Islamic financial products and services. The study conducted by Abdullah and Anderson (2015) is important in terms of explaining the effect of Islamic financial knowledge and trend on Islamic financial literacy. In this study, Abdullah and Anderson (2015) conducted a comprehensive research on bankers in Kuala Lumpur / Malaysia and identified nine factors affecting the level of financial literacy. These factors include views on banking products, views on Islamic banking products, parents’ influence on the views of Islamic products and services, factors affecting investments in securities, views on conventional banking products, attitudes towards personal financial management, effect of personal financial management and knowledge about wealth planning and management. Antara et al. (2016) concluded that the basic determinants are knowledge of Islamic finance principles and Islamic finance methods. Zaman et al. (2017) concluded that the service quality and legitimacy of Islamic banking have an impact on the adoption of Islamic banking products and services. Ahmad et al. (2020) identified compliance with Sharia and knowledge of the concepts of interest and profit/ loss as two main dimensions that determine financial literacy. Similarly, Ganesan et al. (2020), in their study in Malaysia, concluded that if Islamic banking customers intend to have information about Islamic finance issues, their behaviours, attitudes and personal judgments are affected by this. In this connection, we have developed the second hypothesis of the study. H2: Being a customer of an Islamic bank is influential on the level of Islamic financial literacy. Studies on the determinants and measurement of Islamic financial literacy can be seen in the literature given in detail above. In addition, there are studies investigating Islamic financial literacy in different dimensions, and the results obtained have given the opportunity to evaluate the subject from different aspects. Studies that measure the effect of professional groups on Islamic financial literacy can be shown as an example. Çömlekçi (2017), Er and Mutlu (2017) and Daradkah et al. (2020) addressed the issue in relation to occupational groups. Studies have revealed different results regarding the effect of occupational groups on the level of Islamic financial literacy. Çömlekçi (2017) reached the conclusion that public employees have a high level of Islamic financial literacy, while Er and Mutlu (2017) determined the Islamic financial literacy level of private sector employees is higher. Daradkah et al. (2020) could not find a relationship between the occupational group and the level of Islamic financial literacy. In this connection, we have developed the third hypothesis of the study. H3: Professional group is influential on the level of Islamic financial literacy. As a result, there is an extensive literature on financial literacy, the factors affecting financial literacy and their importance. However, much of the empirical research done to date has focused on conventional financial literacy, and Islamic financial literacy has been a subject to a limited amount of research (Eliza and Susanti, 2020; Daradkah et al., 2020). As the current study has reached some results regarding Islamic financial literacy in Turkey, it is believed to make important contributions to the literature. The new findings obtained are important as they provide new evidence.
  7. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 97 3. Research Methodology 3.1. Purpose of the Study The purpose of the current study is to identify the level of Islamic financial literacy of the individuals living in Turkey and to determine the demographic variables affecting the level of Islamic financial literacy. In this context, it was investigated whether the demographic variables such as gender, age, marital status, income status, education level, the sector of employment and the state of being a customer of an Islamic bank have effects on the level of Islamic financial literacy. Islamic financial literacy was divided into 4 dimensions and the levels of individuals for each dimension were evaluated as either basic level or advanced level and on the basis of the total score. These dimensions were grouped as “General Islamic Finance”, “Islamic Products”, “Islamic Finance Calculations”, “Islamic Finance Institutions and Operations” and then the total Islamic financial literacy levels of individuals were calculated. 3.2. Population and Sample of the Study The population of the current study is all the people aged 18 or over and living in Turkey while the sample of the study is comprised of 476 people. The questionnaire was administered to the participants in the period between July and September 2020. The questionnaire was administered online and people from a total of 32 different cities participated in the survey. In Turkey, there were about 57 million people aged 18 or over and living in Turkey in 2020. For a sample of 476 people and a population of 57 million, the margin of error arising from the sample at 95% confidence level is 4.49%. 3.3. Data Collection Tool In the current study, the Islamic Financial Literacy Questionnaire was used. The Islamic Financial Literacy Questionnaire consists of 4 dimensions. For each correct answer to each item in the questionnaire, 1 point is assigned while no point is assigned when no answer or false answer is given or the option “Don’t know” is marked. Then, by summing the points, the total score of each participant is calculated. The questionnaire has two sections. The first section (Items 1-6) includes items to elicit demographic information. In the second section, there is the financial literacy scale consisted of 38 items. The items 1, 2, 4, 9, 10, 15, 20, 22, 28, 29, 30 and 31 are the items originally used by Louw, Fouche and Jaco (2013) and adapted to Turkish by Kılıç, Ata and Seyrek (2012), the item 21 is the item originally used by Chen and Volpe (1998) and adapted to Turkish by Kılıç, Ata and Seyrek (2012); the items 26 and 27 are the items originally used by Knoll and Huts (2012) and adapted to Turkish by Kılıç, Ata and Seyrek (2012); the items 34, 36, and 38 are the items originally used by Chinen and Endo (2012) and adapted to Turkish by Kılıç, Ata and Seyrek (2015). The first 32 items can be responded with one of the following options “True”, “False” and “Don’t know”. The items 33-38 are multiple choice items. The financial literacy dimensions used in the scale were divided into four groups. These groups are as follows;
  8. 98 Mustafa Kevser • Mesut Doğan Table 1. Items in the Dimensions of Islamic Financial Literacy Scale and Dimensions Survey Items General Islamic Finance (Total) 3,4,5,7,8,9,12,13,17,18,19,20,22,39,40,4 1,42 General Islamic Finance (Advanced) 19,20 General Islamic Finance (Basic Level) 3,4,5,7,8,9,12,13,17,18, 22,39,40,41,42 Islamic Products (Total) 6,10,11,14,16,21,24,25,26,27,36,37,38 Islamic Products (Advanced) 11,14,21,27,36,37 Islamic Products (Basic Level) 6,10,16,24,25,26,27,38 Islamic Finance Calculations (Total) 23,29,30,32,33,34,35 Islamic Finance Calculations (Advanced) 29,30 Islamic Finance Calculations (Basic Level) 23,32,33,34,35 Islamic Finance Institutions and Operations (Total) Islamic Financial Institutions and Operations (Advanced) Islamic Financial Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) 1,2,15,28,31,43,44,45,46,47 15,44,45,46,47 1,2,28,31,43 1-47 Islamic Financial Literacy (Total Advanced) 11,14,15,19,20,21,27,29,30,36,37,44,45, 46,47 Islamic Financial Literacy (Total Basic Level) 1-10 12,13,16,17,18,22-26,28,31-35,38-43 3.4. Research Method As the data obtained were found to be normally distributed, two of the parametric tests; t-test and ANOVA, were used. Post-Hoc Tukey test was used to make multiple comparisons between the groups in ANOVA test. In addition, descriptive statistics obtained for the data about demographic features are given in the current study. 4. Findings In this section of the study, findings related to the level of Islamic financial literacy of the participants living in Turkey are given. Table 2. Demographic Information of Participants Gender Features N % Female 204 42.9 Male 272 57.1 Having an account in an Islamic bank Features N % Yes 133 27.9 No 343 72.1
  9. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey Age Marital status Education Income Features N % 18-25 348 73.1 26-35 62 13.0 36-50 46 9.7 51 and over 20 4.2 Single 370 77.7 Married 106 22.3 Primary 20 4.2 High School 128 26.9 Associate degree 194 Bachelor and over 99 Features N % 1 78 16.4 2 35 7.4 3 and over 20 4.2 Less than 1 year 18 3.8 1-3 years 62 13.0 3-5 years 33 6.9 5-10 years 14 2.9 10 years and over 6 1.3 40.8 Public sector 72 15.1 134 28.2 Private sector 108 22.7 1500 TL and below 240 50.4 Self-employed 32 6.7 1501TL-2500 TL 74 15.5 Retired 12 2.5 2501TL-4000 TL 90 18.9 Unemployed 252 52.9 4001 TL6000 TL 40 8.4 6001 TL and over 32 6.7 How many different Islamic bank accounts do you have? How many years have you had an Islamic bank account? Occupation Table 2 includes demographic and Islamic banking information of the individuals participating in the study. According to the results, most of the participants are single and between the ages of 18-25. In addition, 57.1% of the individuals participating in the study are males, 40.8% hold an associate’s degree, 50.4% have an income of 1500 TL or less, and 22.7% are working in the private sector. In addition, 27.9% of the participants have an account in an Islamic bank. While 16.4% of the participants have an account only in one Islamic bank, 13% of them have had an account in an Islamic bank for 1-3 years.
  10. 100 Table 3 . Descriptive Statistics for the Dimensions of Islamic Financial Literacy True (%) (Mean) 33.79 Dimensions General Islamic Finance (Total) Std. Dev. 21.81 General Islamic Finance (Advanced) 33.40 41.39 General Islamic Finance (Basic Level) Islamic Products (Total) 33.70 28.31 21.92 27.03 32.37 29.41 29.95 29.04 27.52 37.68 30.92 35.38 33.26 32.10 33.96 38.66 26.88 32.06 23.72 Islamic Financial Literacy (Total Advanced) 29.64 29.67 Islamic Financial Literacy (Total Basic Level) 33.20 22.35 Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Financial Institutions and Operations (Advanced) Islamic Financial Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) 28.98 30.64 27.55 As can be seen in Table 3, the total Islamic financial literacy is 32.06% while the total basic level Islamic financial literacy is 33.20% and the total advanced Islamic literacy is 29.64%. The highest literacy level was found for the dimension of “Islamic Financial Institutions and Operations” (35.38%) while the lowest literacy level was found for the dimension of “Islamic Products” (27.03%). Table 4. Comparison of Islamic Financial Literacy Levels by Gender Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Groups F Mean (%) Std. Dev. Female 204 33.97 22.67 Male 272 33.65 21.18 Female 204 36.27 40.41 Male 272 31.25 42.06 Female 204 33.56 22.57 Male 272 33.80 21.47 Female 204 27.90 29.21 Male 272 28.62 28.86 P .875 .190 .908 .790
  11. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey Islamic Financial Literacy Dimensions Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) 101 Groups F Mean (%) Std. Dev. Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male 204 272 204 272 204 272 204 272 204 272 204 272 204 272 204 272 204 272 204 272 204 272 25.98 27.82 29.55 29.31 33.89 27.00 29.41 26.10 35.69 27.35 38.24 33.24 32.94 31.47 43.53 35.00 33.17 31.23 30.13 29.26 34.59 32.15 32.21 32.53 29.56 28.69 31.19 29.94 38.03 37.43 34.11 32.22 28.88 26.36 35.36 32.93 27.28 26.03 24.62 23.04 29.96 29.51 23.48 21.44 P .540 .928 .015** .344 .007*** .050** .641 .001*** .378 .753 .238 *10%, **5% and ***1% statistical significance. The results of the independent samples t-test conducted to determine the relationship between the participants’ gender and Islamic literacy level are presented in Table 4. According to the results of the analysis, the scores taken from the dimensions of “Islamic Finance Calculations” and “Islamic Institutions and Operations” vary significantly by gender at the basic level and in total. In other words, the scores of the female participants are higher than those of the male participants taken from the dimensions of “Islamic Finance Calculations” and “Islamic Financial Institutions and Operations” at the basic level and in total. On the other hand, the scores taken from the dimensions of “Islamic Finance Calculations” and “Islamic Financial Institutions and Operations” do not vary significantly by gender at the advanced level. Similarly, the scores taken from the dimensions of basic and advanced level “General Islamic Finance” and “Islamic Products” and the total financial literacy were found to be not varying significantly depending on gender.
  12. 102 Mustafa Kevser • Mesut Doğan Table 5. Comparison of Islamic Financial Literacy Levels by Marital Status Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) Groups Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male F 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 370 106 Mean (%) 32.69 37.63 31.08 41.51 32.72 37.11 28.19 28.74 26.58 28.62 29.58 28.84 29.96 29.92 28.65 23.58 30.49 32.45 34.49 38.49 31.68 33.58 37.30 43.40 31.44 34.20 29.15 31.32 32.52 35.56 Std. Dev. 21.10 23.82 39.56 46.53 21.54 23.00 27.87 32.73 31.06 36.71 28.18 31.97 30.49 31.33 37.77 37.29 32.99 34.30 26.54 30.76 32.76 38.00 26.41 28.08 22.86 26.54 28.46 33.65 21.69 24.47 P .040** .022** .069* .864 .568 .819 .990 .223 .592 .187 .610 .039** .292 .508 .218 *10%, **5% and ***1% statistical significance. The results of the t-test conducted to compare the participants’ Islamic financial literacy levels by marital status are presented. According to the results, the general Islamic finance knowledge level varies significantly depending on marital status. Similarly, the scores taken from the dimension of basic level “Islamic Finance Institutions and
  13. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 103 Operations” vary significantly depending on marital status. In other words, the general Islamic finance knowledge level and Islamic institutions and operations knowledge level of the married participants are higher than those of the single participants. On the other hand, the total Islamic financial literacy score and the scores taken from the other dimensions were found to be not varying significantly depending on marital status. Table 6. Comparison of Islamic Financial Literacy Levels by Age Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Groups 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over F Mean (%) Std. Dev. 348 31.91 20.44 128 38.88 24.52 348 31.03 40.35 128 39.84 43.63 348 31.90 20.78 128 38.59 24.17 348 27.76 27.59 128 29.81 32.55 348 25.77 30.92 128 30.47 35.93 348 29.47 27.99 128 29.24 31.81 348 29.64 30.25 128 30.80 31.79 348 27.87 37.37 128 26.56 38.65 P .002*** .039** .003*** .496 .160 .938 .714 .737
  14. 104 Mustafa Kevser • Mesut Doğan Islamic Financial Literacy Dimensions Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) Groups 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over 25 and under 26 and over F Mean (%) Std. Dev. 348 30.34 33.11 128 32.50 33.77 348 34.20 26.87 128 38.59 29.21 348 31.61 33.21 128 33.44 36.03 348 36.78 26.54 128 43.75 27.23 348 30.95 22.50 128 35.07 26.63 348 28.70 28.31 128 32.19 33.08 348 32.01 21.30 128 36.43 24.76 P .531 .123 .603 .012** .093* .256 .056* *10%, **5% and ***1% statistical significance. In Table 6, the results of the comparisons of the participants’ Islamic financial literacy levels by age are presented. Age ranges of the participants are not homogeneous. Therefore, the age ranges of the participants were made homogeneous by dividing them into 2 groups. As a result of the analysis, it was found that the scores taken from the dimensions of basic level “General Islamic Finance” and “Islamic Finance Institutions and Operations” and the total Islamic financial literacy vary significantly by age. In other words, the general Islamic finance, Islamic finance institutions and operations basic and total Islamic financial literacy levels of the participants aged 26 and over are higher than those of the participants aged 25 and under. On the other hand, scores taken from the other dimensions of Islamic financial literacy were found to be not varying significantly by age.
  15. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 105 Table 7. Comparison of Islamic Financial Literacy Levels by Education Level Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Groups F Mean (%) Std. Dev. High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over 148 30.21 20.50 194 36.69 20.40 134 33.54 24.57 148 30.41 42.71 194 39.69 40.04 134 27.61 40.93 148 30.18 20.84 194 36.01 20.74 134 34.23 24.29 148 25.05 25.13 194 29.98 29.37 134 29.51 32.14 148 25.00 29.64 194 28.18 32.13 134 27.61 35.58 148 25.10 24.81 194 31.52 29.58 134 31.13 32.10 148 26.06 27.62 194 33.73 31.61 134 28.78 31.97 P .024** .019** .048** .255 .648 .092* .063*
  16. 106 Mustafa Kevser • Mesut Doğan Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over High School Associate’s Degree Bachelor and over *10%, **5% and ***1% statistical significance. 148 22.30 33.14 194 29.90 37.17 134 29.85 42.53 148 27.57 30.72 194 35.26 35.00 134 28.36 32.93 148 30.81 25.38 194 37.94 27.43 134 36.72 29.55 148 26.76 31.35 194 33.81 34.59 134 35.52 35.34 148 34.86 25.57 194 42.06 26.15 134 37.91 28.84 148 28.29 20.90 194 34.70 23.22 134 32.39 26.81 148 25.95 26.77 194 31.82 29.23 134 30.55 33.01 148 29.39 19.90 194 36.05 21.91 134 33.26 24.92 .127 .061* .048** .063* .046** .046** .177 .024**
  17. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 107 Results of the One-Way Anova test conducted to compare the participants’ Islamic literacy levels by education level are given in Table 7. According to the results of the analysis, the scores taken from the dimensions of “General Islamic Finance”, “Islamic Finance Calculations” and “Islamic Finance Institutions and Operations” vary significantly depending on education level. On the other hand, the scores taken from the dimension of “Islamic Products” were found to be not varying significantly depending on education level. According to the results obtained from the Post HOC Tukey test, the Islamic financial literacy level of the participants having high school or lower education is significantly lower than that of the participants having education level higher than high school. Table 8. Comparison of Islamic Financial Literacy Levels by Income Status Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Groups 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over F Mean (%) Std. Dev. 240 32.55 21.73 236 35.04 21.87 240 33.33 40.05 236 33.47 42.80 240 32.45 22.04 236 34.97 21.78 240 28.27 28.36 236 28.36 29.67 240 28.19 31.38 236 25.85 33.38 240 28.33 28.33 236 30.51 29.76 240 31.91 28.97 236 27.97 32.19 P .212 .970 .209 .974 .430 .414 .161
  18. 108 Mustafa Kevser • Mesut Doğan Islamic Financial Literacy Dimensions Groups Islamic Finance Calculations (Advanced) 1500 TL and below 1501 TL and over Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total)) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over 1500 TL and below 1501 TL and over F Mean (%) Std. Dev. 240 30.83 38.91 236 24.15 36.16 240 32.33 31.39 236 29.49 35.08 240 34.42 26.16 236 36.36 28.93 240 30.83 32.41 236 33.39 35.50 240 38.00 25.80 236 39.32 27.97 240 31.67 22.98 236 32.46 24.50 240 30.11 27.93 236 29.15 31.39 240 32.40 22.12 236 34.01 22.59 P .153 .352 .443 .412 .592 .717 .725 .433 *10%, **5% and ***1% statistical significance. In Table 8, the results of the comparison of the participants’ Islamic financial literacy levels by income status are presented. The income ranges of the participants are not homogeneous. Therefore, the income ranges of the participants were made homogeneous by dividing them into 2 groups. As a result of the analysis, income status was found to have no significant effect on the Islamic financial literacy and its dimensions. Thus, it can be argued that there is no statistically significant difference between the Islamic financial literacy levels of the participants from different income statuses.
  19. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 109 Table 9. Comparison of Islamic Financial Literacy Levels According to State of Being a Customer of an Islamic Bank Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) Groups F Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No Yes No 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 133 343 Mean (%) 39.45 31.59 36.09 32.36 39.90 31.29 36.09 25.30 33.33 24.59 38.45 25.91 33.94 28.41 32.33 25.66 34.59 29.50 41.88 32.86 37.89 29.85 45.86 35.86 38.22 29.67 35.09 27.52 39.69 30.68 Std. Dev. 23.49 20.74 42.35 41.03 23.41 20.86 32.03 27.17 35.47 30.79 31.41 27.31 31.78 30.10 39.50 36.84 34.48 32.72 28.87 26.64 35.95 32.94 26.83 26.41 25.78 22.47 31.89 28.54 24.11 21.13 P .000*** .378 .000*** .000*** .008*** .000*** .077* .083* .135 .001*** .020** .000*** .000*** .012** .000*** *10%, **5% and ***1% statistical significance. In Table 9, the results of the comparison of the participants’ Islamic financial literacy levels by the state of being a client of an Islamic bank are presented. According to the results of the analysis, the scores taken from the dimensions of “General
  20. 110 Mustafa Kevser • Mesut Doğan Islamic Finance”, “Islamic Finance Institutions and Operations”, “Islamic Finance Calculations” and “Islamic Products” vary significantly depending on the state of being a client of an Islamic bank. In other words, the Islamic financial literacy level of the participants who are customers of an Islamic bank is higher than that of the participants who are not clients of an Islamic bank. Table 10. Comparison of Islamic Financial Literacy Levels According to the Number of Islamic Banks Where the Participant Has an Account Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Groups F 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 1 bank 2 and more 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 78 55 Mean (%) 42.23 35.51 34.62 38.18 43.25 35.15 38.66 32.45 33.76 32.73 42.86 32.21 35.16 32.21 35.90 27.27 34.87 34.18 44.10 38.73 41.54 32.73 46.67 44.73 40.59 34.86 36.75 32.73 Std. Dev. 23.02 23.80 41.33 44.06 22.58 23.95 32.82 30.79 36.73 33.94 32.23 29.38 33.18 29.89 41.01 37.04 35.81 32.81 27.23 31.03 35.42 36.39 25.52 28.79 26.16 25.08 32.41 31.28 P .104 .634 .049 .272 .869 .054 .599 .216 .910 .292 .165 .683 .208 .476
  21. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 111 Islamic Financial Literacy Dimensions Groups F Mean (%) Std. Dev. P Islamic Financial Literacy (Total Basic Level) 1 bank 2 and more 78 55 42.39 35.86 24.42 23.35 .124 *10%, **5% and ***1% statistical significance. In Table 10, the results of the comparison of the participants’ Islamic financial literacy levels according to the number of Islamic banks where the participant has an account are presented. As a result of the analysis, it was concluded that the scores of the participants having only one account in one Islamic bank taken from the dimensions of basic level “General Islamic Finance” and “Islamic Products” are higher than those of the participants having accounts in 2 or more Islamic banks. On the other hand, the literacy scores taken from the other dimensions of financial Islamic literacy were found to be not varying significantly depending on the number of the Islamic banks where the participant has an account. Thus, it can be argued that the number of the Islamic banks where the participant has an account did not create a significant effect on the total Islamic financial literacy. Table 11. Comparison of Islamic Financial Literacy Levels Depending on the Length of Time during which the Participant Has Had an Account in an Islamic Bank Islamic Financial Literacy Dimensions General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Groups F Mean (%) Std. Dev. Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years 80 40.74 20.78 53 37.51 27.18 80 33.75 39.60 53 39.62 46.37 80 41.67 21.31 53 37.23 26.26 80 38.27 31.23 53 32.80 33.23 80 35.00 35.34 53 30.82 35.86 80 41.07 30.19 53 34.50 33.08 More than 3 years P .441 .436 .287 .337 .508 .239
  22. 112 Mustafa Kevser • Mesut Doğan Islamic Financial Literacy Dimensions Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) Groups F Mean (%) Std. Dev. Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years Less than 3 years More than 3 years 80 35.36 31.66 53 31.81 32.14 80 36.25 40.55 53 26.42 37.47 80 35.00 34.20 53 33.96 35.21 80 41.75 26.80 53 42.08 32.01 80 39.00 35.99 53 36.23 36.17 80 44.50 23.16 53 47.92 31.71 80 39.47 23.99 53 36.33 28.41 80 36.33 30.78 53 33.21 33.70 80 40.94 22.28 53 37.80 26.76 P .530 .161 .866 .950 .665 .473 .494 .582 .464 *10%, **5% and ***1% statistical significance. In Table 11, the results of the comparison of the participants’ Islamic financial literacy levels depending on the length of time during which the participant has had an account in an Islamic bank are given. Participants’ lengths of time during which they have had an in an Islamic bank are not homogeneous. Therefore, the lengths of time were made homogeneous by dividing them into 2 groups. According to the results of the analysis, the length of time during which the participant has had an account in an Islamic bank does not have any significant effect on the total Islamic financial literacy and its dimensions.
  23. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 113 Table 12. Comparison of Islamic Financial Literacy Levels According to the Occupation of the Participants Islamic Financial Literacy Dimension General Islamic Finance (Total) General Islamic Finance (Advanced) General Islamic Finance (Basic Level) Islamic Products (Total) Islamic Products (Advanced) Islamic Products (Basic Level) Islamic Finance Calculations (Total) Islamic Finance Calculations (Advanced) Islamic Finance Calculations (Basic Level) Islamic Finance Institutions and Operations (Total) Islamic Finance Institutions and Operations (Advanced) Groups F Mean (%) Std. Dev. Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 72 108 32 36.11 37.91 39.34 34.72 37.04 40.63 36.30 37.84 39.17 25.64 34.05 37.98 24.07 31.79 39.58 26.98 35.98 36.61 24.60 29.89 46.43 22.22 25.93 40.63 25.56 31.48 48.75 34.44 38.70 36.88 31.11 37.04 28.75 24.75 19.89 17.13 44.12 43.43 41.03 24.43 19.63 16.22 31.68 29.17 24.32 34.13 34.60 31.04 31.59 28.13 22.35 30.25 32.94 30.57 36.47 37.12 41.03 31.35 36.19 32.90 26.48 30.39 27.53 33.38 35.32 31.29 P .747 .811 .791 .076* .083* .090* .006*** .067* .007*** .622 .348
  24. 114 Mustafa Kevser • Mesut Doğan Islamic Financial Literacy Dimension Islamic Finance Institutions and Operations (Basic Level) Islamic Financial Literacy (Total) Islamic Financial Literacy (Total Advanced) Islamic Financial Literacy (Total Basic Level) Groups F Mean (%) Std. Dev. Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed Public Sector Private Sector Self-employed 72 108 32 72 108 32 72 108 32 72 108 32 37.78 40.37 45.00 31.15 35.78 39.49 27.59 33.46 36.25 32.81 36.87 41.02 24.57 30.57 28.28 26.00 24.30 19.23 31.30 32.00 29.23 24.53 21.96 16.49 P .486 .224 .328 .195 *10%, **5% and ***1% statistical significance. In Table 12, the results of the comparison of the participants’ Islamic financial literacy levels by the sector of employment. According to the results of the analysis, the participants’ literacy scores taken from the dimensions of “Islamic Products” and “Islamic Finance Calculations” vary significantly depending on the sector of employment. In this regard, the literacy scores taken from the dimensions of “Islamic Products” and “Islamic Finance Calculations” by the self-employed are higher than those of the public sector and private sector workers. On the other hand, the literacy scores taken from the dimensions of “General Islamic Finance” and “Islamic Finance Institutions and Operations” were found to be not varying significantly depending on the sector of employment. 5. Discussion And Results Financial crises in recent years, the development of financial markets, and the complexity of banking products have contributed to increasing interest in financial literacy (Al-Tamimi and Kalli; 2009; Abdullah and Anderson, 2015). Low level of financial information causes erroneous financial decisions and this has negative effects on the financial structure of countries; as a result, importance of financial literacy has increased (Chen and Volpe, 1998; Atkinson and Messy, 2012; Ganesan, 2016). The development of Islamic finance and banking in the last two decades has led to increasing interest in Islamic financial products and Islamic banking and Islamic financial products have become an important alternative for both Muslims and nonMuslims (Chong and Liu, 2009, Setiawati et al., 2018). In this respect, Islamic financial literacy has gained importance in order to understand Islamic financial products and to make correct decisions in Islamic finance and banking practices within the framework of Islamic law (Ahmad and Haron, 2002). Islamic financial literacy is a very new topic and there is limited research on it (Rahim et al., 2016, Eliza and Susanti, 2020; Rozikin
  25. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 115 and Sholekhah, 2020). With the current study, it was aimed to make contributions to limited Islamic finance literature in Turkey and help fill the void in the literature. In the current study, a questionnaire consisted of 47 items was administered to 476 people living in Turkey in the period between July and September 2020 and the items were gathered under four dimensions and used to measure the Islamic financial literacy levels of the participants. As a result of the analyses, the total Islamic financial literacy of the participants was found to be 32.06% while the total basic level Islamic financial literacy was found to be 33.20% and the total advanced Islamic literacy was found to be 29.64%. The highest literacy level was found for the dimension of “Islamic Finance Institutions and Operations” (35.38%). The lowest literacy level was found for the dimension of “Islamic Products” (28.31%). When the Islamic financial literacy obtained in the current study was compared to the Islamic financial literacy found by Abdullah et al. (2017) as 47.36% and by Setyowati et al. (2018) as 65% and by Albaity and Rahman (2019) as 62% seems to be highly low. When the countries with higher Islamic financial literacy scores are analyzed, it is seen that they include countries such as Malaysia, Indonesia and the United Arab Emirates. These are the countries where Islamic finance and Islamic banking practices have been developed and thus, compared to Turkey, financial literacy is naturally more advanced in these countries. In this respect, given that the Islamic finance and banking practices are still in the development stage in Turkey, it is quite normal that Islamic literacy is also in the stage of development. Thus, Islamic financial literacy scores vary from country to country. In the current study, first, the hypothesis that demographic variables have an effect on the level of Islamic financial literacy and then the hypothesis that being a customer of an Islamic bank has an effect on the level of Islamic financial literacy were developed. The demographic variables of the current study are gender, marital status, age, education level and income status. According to the results of the current study, the literacy scores taken from the dimensions of “Islamic Finance Calculations” and “Islamic Finance Institutions and Operations” vary significantly depending on gender. These findings seem to be in compliance with the literature. Chen and Volpe (1998) stated that gender has a decisive role in financial literacy while Abdullah et al. (2017) and Albaity and Rahman (2019) stated that it has an important influence on Islamic financial literacy. However, in the current study, the Islamic financial literacy level of the female participants was found to be higher than that of the male participants. This finding of the current study is different from the findings of the studies showing that the financial literacy level of men is higher than that of women (Chen and Volpe, 1998; Eser and Yiğiter; 2020). This might be because the gold and foreign currency are traditional means of investment in Turkey. Investment in gold is generally made by women in Turkey, and women tend to make more investment in institutions purchasing physical gold, which may explain this finding of the current study. In the current study, it was concluded that marital status has a significant effect on the literacy scores taken from the dimensions of “General Islamic Financial Literacy” and “Islamic Finance Institutions and Operations”. When people get married, they
  26. 116 Mustafa Kevser • Mesut Doğan need to manage family budget, which may contribute to their having higher level of Islamic financial literacy than singles. The results related to age demographic variable in the current study have revealed that the Islamic financial literacy level of the participants aged 26 and over is higher. When the results related to the effect of the education level democratic variable are examined, it is seen that the Islamic financial literacy level of the participants who have high school or higher level of education is higher. The results obtained for the age and education level demographic variables in the current study concur with the literature (Chen and Volpe, 1998; Çömlekçi, 2017; Albaity and Rahman, 2019; Darakdah et al., 2020; Sapir and Ahmad, 2020; Suci and Hardi, 2020). With increasing age, individuals tend to develop higher awareness of saving and investing. Thus, with increasing age, individuals are expected to focus more on financial issues to make more correct decisions and to increase their financial literacy. The fact that Islamic banking is developing as an alternative in Turkey may give rise to the result that older people’s Islamic financial literacy is increasing. In addition, the higher amount of young population in Turkey, the rapidly increasing number of universities in recent years and the classes offered in these universities on Islamic finance and banking increase the level of Islamic financial literacy among the participants who have high school education and higher level of education. On the other hand, no relationship was found between income status and Islamic financial literacy level. In other words, income status is not effective on Islamic financial literacy level. When the results obtained in the current study are evaluated for Turkey, it can be said that people from each income status have accounts in Islamic banks and that income status does not lead to a significant difference on the level of Islamic financial literacy. These results related to the demographic variables support the first hypothesis of the study. Thus, it can be argued that the demographic variables are influential on the level of Islamic financial literacy. In the current study, the state of having an account in an Islamic bank, the number of Islamic banks where the participant has an account and the length of time during which the participant has an account in an Islamic bank were also evaluated in terms of their relationship with the level of Islamic finance literacy. The results obtained have revealed that those who have an account in an Islamic bank have a higher level of Islamic financial literacy than those who do not. In addition, the number of Islamic banks where the participant has an account and the sector of employment were found to have effects on the level of Islamic financial literacy. These results support the results reported by Abdullah and Anderson (2015), Antara et al. (2016), Zaman et al. (2017). The length of time during which the participant has had an account in an Islamic bank was found to have an effect on the level of Islamic finance literacy. The customers of an Islamic bank conduct more Islamic banking transactions than those who are not customer of an Islamic bank and thus, their level of information about Islamic banking products and services is increasing. Hence, Islamic bank customers have higher Islamic financial literacy than non-Islamic bank customers. The results obtained in this context support the second hypothesis of the current study and it can be said that being a customer of an Islamic bank has an effect on Islamic financial literacy.
  27. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 117 Another result of the current study is that the sector in which the participants work is effective on the level of Islamic financial literacy. According to the results of the current study, the self-employed people have a higher level of Islamic financial literacy compared to the public and private sector employees. This result is different from the results reported by Çömlekçi (2017) and Er and Mutlu (2017). According to Çömlekçi (2017), public sector employees and according to Er and Mutlu (2017) private sector employees have a higher level of Islamic financial literacy. The results obtained support the third hypothesis of the current study and thus, occupational groups can be said to have a significant effect on the level of Islamic financial literacy. In Turkey, it can be said that self-employed people work more with Islamic banks. Public employees make salary agreements in return for promotions in certain periods and these agreements are mostly made with conventional banks. In addition, the private sector has a tendency to work with conventional banks. Thus, the Islamic financial literacy level of self-employed people may be higher compared to the other two groups. The results of the current study have both theoretical and administrative contributions. The obtained results are important as they offer important insights about Islamic financial literacy in Turkey. In addition, the results obtained from the research on Islamic banking can be capitalized on in many ways. In the current study, demographic variables have been proved to have effect on Islamic financial literacy. In this connection, the finding of the current study showing that the participants aged 26 or over have a higher level of Islamic financial literacy can help Islamic banks in determining their customer profile. In addition, as it has been revealed in the current study that selfemployed people have a higher level of Islamic financial literacy, the introduction of new Islamic products and services can be first made to this group of customers. Thus, the results regarding especially demographic variables can help managers determine the new Islamic products and target markets. The current study has some limitations. The main limitation of the study is that the results have been obtained within the context of Turkey and cannot be generalized. Differences such as different demographic structure, culture, economic and legal infrastructure may lead to different results in different environments. Yet, the results obtained in the current study may provide guidance for future research. Participants may have some prejudices about Islamic finance, Islamic banking and Islamic products but the great majority of the people living in Turkey are Muslim and therefore, it may be easier for people to understand and evaluate Islamic finance, Islamic banking and Islamic products that must be offered in compliance with Islamic law. Future research to be conducted on Islamic finance can analyze different demographic variables. Larger samples can be used in future research. Similar studies to be conducted will contribute to the better understanding of the issue.
  28. 118 Mustafa Kevser • Mesut Doğan References Abdullah, M.A., Wahab, S.N.A.A., Sabar, S., Abu, F (2017). Factors determining Islamic financial literacy among undergraduates. Journal of Emerging Economies and Islamic Research. 5(2): 67-76. Abdullah, M.A., Anderson, A (2015). Islamic financial literacy among bankers in Kuala Lumpur. Journal of Emerging Economies and Islamic Research, 3(2): 1-16. Doi: 10.24191/ jeeir. v3i2.9061. Abdul Hamid, A.H., Mohd Nordin, N.A. (2001). A study on Islamic banking education experience and the strategy for the new millenium-A Malaysian evidence. International Journal of Islamic Financial Services. 2(4). Abdullah, H.R., Abdul Razak, A.L.H (2015). Exploratory research ınto Islamıc financial literacy in Brunei Darussalam. Doi: 10.13140/RG.2.1.4815.1765 Ahmad, N., Haron, S. (2002). Perceptions of Malaysian corporate customers towards Islamic banking products and services, International Journal of Islamic Financial Services, 3(4): 13-29. Ahmad, G.N., Widyastuti, U., Susanti, S., Mukhibad, H. (2020). Determinants of the Islamic financial literacy. Accounting, 6: 961-966. Albaity, M., Rahman, M. (2019). The intention to use Islamic banking: An exploratory study to measure Islamic financial literacy. International Journal of Emerging Markets, 14(5): 988-1012. Almenberg, J., Dreber, A. (2015). Gender, stock market participation and financial literacy. Economic Letters. 137: 140–142. Ansong, A., Gyensare, M. A. (2012). Determinans of university working-students financial literacy at the university of Cape Coast. International Journal of Business and Management. 9(7): 126-133. Antara, P.M., Musa, R., Hassan, F. (2016). Bridging Islamic financial literacy and halal literacy: The way forward in halal ecosystem. Prodecia Economics and Finance. 37: 196-202. Atkinson, A., Messy, F. (2012). Measuring financial literacy: results of the OECD/ international network on financial education (ınfe) pilot study. OECD Working Papers on Finance Insurance and Private Pensions, 15, OECD Publishing.doi.org/10.1787/5k9csfs90fr4-en. Al-Tamimi, H.A.H., Kalli, A.A.B. (2009). Financial literacy and ınvestment decisions of UAE investors. The Journal of Risk Finance. 10(5): 500-516. Beal, D. J., Delpachitra, S. B. (2003). Financial literacy among Australian University students. A Journal of Applied Economics and Policy. 22(1): 65-78. Bekereci, N.E., Ayrıçay, Y., Kök, D. (2018). İslami finansal okuryazarlık: Kahramanmaraş Sütçü İmam Üniversitesi’nde bir alan araştırması. Pamukkale Üniversitesi Sosyal Bilimler Enstitüsü Dergisi. 33: 45-60. Chapra, U. (1985). The case against riba: Is it compelling? Thunderbird International Business Review. 49(2): 161-186. Chen, H., Volpe, R.P. (1998). An analysis of personal financial literacy among college students. Financial Services Review. 7(2): 107-128. Chen, H., Volpe, R. P. (2002). Gender differences in personal finance literacy among college students. Financial Services Review. 11: 289-307. Chong, B.S., Liu, M.H. (2009). Islamic banking: interest free or interest based? Pacific-Basin
  29. Islamic Financial Literacy and Its Determinants : A Field Study on Turkey 119 Finance Journal. 17(1): 125-144. Çömlekçi, İ. (2017). İslami finansal okuryazarlık düzeyinin belirlenmesi: Katılım bankaları müşterileri üzerine bir araştırma. Elektronik Sosyal Bilimler Dergisi. 16(63): 1423-1439. Daradkah, D., Aldaher, A.A., Shinaq, H.R. (2020). Islamic financial literacy, evidence from Jordan. Journal Transition Studies Review. 27(2): 131-145. Doğan, M. (2019). Türkiye finansal okuryazarlık araştırması. Üçüncü Sektör Sosyal Ekonomi Dergisi. 54(4): 1602-1620. Durmuş, M.E., Yardımcıoğlu, F. (2018). İlahiyat öğrencileri ne kadar İslami finans okuryazarı? Siyaset, Ekonomi ve Yönetim Araştırmaları Dergisi. 6(1): 167-183. Er, B., Mutlu, M. (2017). Financial inclusion and Islamic finance: A survey of Islamic financial literacy Index. International Journal of Islamic Economics and Finance Studies. 3(2): 33-54. Eliza, A., Susanti, V. (2020). Islamic financial literacy among sharia bankers in Bandar Lampung. Jurnal Ekonomi dan Keuangan Islam. 9(1): 92-109. Eser, A., Yiğiter, Ş.Y. (2020). Katılım bankasında hesapları bulunan bireylerin finansal okuryazarlık düzeyinin belirlenmesi: Erzincan ili örneği. İşletme, Ekonomi ve Yönetim Araştırmaları Dergisi. 2: 234-253. Ganesan, Y., Pitchay, A.B.A., Nasser, M.A.M. (2020). Does intention influence the financial literacy of depositors of Islamic banking? A case of Malaysia. International Journal of Social Economics. 47(5): 675-690. Hidajat, T., Hamdani, M. (2017). Measuring Islamic financial literacy. Advanced Science Letters. 23(8): 7173-7176. Hogarth, J.M. (2002). Financial literacy and family and consumer sciences. Journal of Family and Consumer Sciences. 94: 15-28. Huston, S.J. (2010). Measuring financial literacy. Journal of Consumer Affairs. 44(2): 296-316. Ibrahim, D., Harun, R., Isa, Z.M. (2009). A study on financial literacy of Malaysian degrees students. cross-cultural communication. 5(4): 51-59. Khan, M.M., Bhatti, M.I. (2008). Development in Islamic banking: A financial risk allocation approach, The Journal of Risk Finance. 9(1): 40-51. Kılıç, Y., Ata, H.A., Seyrek, İ.H. (2015). Finansal okuryazarlık: üniversite öğrencilerine yönelik bir araştırma, Muhasebe Finansman Dergisi. 66: 129-150. Kontot, K., Harnali, J., Abdullah, F. (2016). Determining factors of customers’ preferences: a case of deposit products in Islamic banking. Procedia Social and Behavioral Sciences. 224: 167-175. Krische, S.D. (2019). Investment experience, financial literacy and investment-related judgments. Contemporary Accounting Research. 36(3): 1634-1668. Louw, J. Fouche, J., Oberholzer, M. (2013). Financial literacy needs of South African third-year university students. International Business and Economics Research Journal. 12(4): 439450. Lusardi, A., Mitchell, O. S., Curto, V. (2011). Financial literacy around the world: An overview, Journal of Pension Economics and Finance. 10: 497-508. Miller, M., Godfrey, N., Levesque, B. (2009). The case for financial literacy in developing countries, World Bank, DFID, OECD and CGAP joint note. Washington, DC: World Bank. 103-118.
  30. 120 Mustafa Kevser • Mesut Doğan OECD (2005) Improving financial literacy: analysis of issues and policies. Organisation For Economic CoOperation and Development. Rahim, S.H.A., Rasid, R.A., Hamed, A.B. (2016). Islamic Financial Literacy and its Determinants among University Students: An Exploratory Factor Analysis. International Journal of Economics and Financial Issues. 6(S7): 32-35. Rozikin, A.C., Sholekhah, I. (2020). Islamic financial literacy, promotion and brand image towards saving intention in sharia bank. Iqtishadia. 13(1), 95-106. Doi: 10.21043/ iqtishadia.v13i1.6489. Remund, D. L. (2010). Financial literacy explicated: the case for a clearer definition in an ıncreasingly complex economy. The Journal of Consumer Affairs. 44(2): 276-295. Sabri, M.F., MacDonald, M., Masud, J., Paim, L., Hira, T.K., Othman, M.A. (2008). Financial behavior and problems among college students in Malaysia: Research and education implication. Consumer Interest Annual. 54: 166-170. Salman, S.A., Ausaf, A. (2004). Islamic Banking and Finance: Fundamentals and Contemporary Issues, Islamic Research and Training Institute and University of Brunei Darussalam, January 5-7, 13-14. Setiawati, R., Nidar, S.R., Anwar, M., Masyita, D. (2018). Islamic financial literacy: construct process and validity. Academy of Strategic Management Journal. 17(4): 1-12. Setyowati, A., Harmadi, H., Sunarjanto, S. (2018). Islamic financial literacy and personal financial planning: a socio-demographic study. Jurnal Keuangan dan Perbankan. 22(1): 63-72. Sapir, A.S., Ahmad, W. M.W. (2020). Financial literacy among Malaysian muslim undergraduates. Journal of Islamic Accounting and Business Research. Doi:10.1108/ JIABR-10-2017-0149. Suci, A., Hardi, H. (2020). Literacy experiment of Islamic financing to Non-Muslim small and micro business. Journal of Islamic Marketing. 11(1): 179-191. Van Rooij, M., Lusardi, A., Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics.101(3): 449–472. Zait, A., Bertea, P. E. (2015). Financial literacy–conceptual definition and proposed approach for a measurement instrument. The Journal of Accounting and Management. 4(3): 37-42. Zaman, Z., Mehmood, B., Aftab, R., Siddique, M.S., Ameen, Y. (2017). Role of Islamic financial literacy in the adoption of Islamic banking services: An emprical evidence from Lahore, Pakistan. Journal of Islamic Business and Management. 7(2): 230-247. https://www.fitchratings.com/research/islamic-finance/sukuk-issuance-rose-in-2019-asdiversification-continues-11-02-2020, (Access date: 15.09.2020).